Companies Extend Support to Retail Trade

 

As businesses struggle with disruption and economic strife caused by the COVID-19 pandemic, many of them have introduced support programmes for trade (retailers/dealers), with the objective of easing the induced stress for different stakeholders. Market Pulse continues to track these events in the retail market and in the latest round, we have endeavored to obtain feedback on special trade programmes in categories such as Small Appliances, Building Electricals, Fans and LED Lighting. Here are some key findings from the dipstick survey carried out in the fourth week of April.

Change in Payment Terms and Credit Period on Offer by Companies


Payment Terms: On an average, 1.5% additional discount on time bound payments has been provided by companies to the trade channel.

As per the respective trade channel partners, Havells & Crompton have offered approx.2.5% additional discount followed by Usha (1.5%). Other notable mentions included — Panasonic, GM, Gold Medal, Great White, TTK Prestige, Philips and Orient.

Credit Period: Companies are largely extended their credit period by 15 days. Majority of building electrical companies (including Panasonic, Great White, GM, Gold Medal, Cona, etc.) have provided an additiona l15 days on existing credit period. On the other hand, electric fans majors offered a credit relaxation period of 7 to 15 days (including Crompton, Havells, Usha etc.)

Kitchen appliances companies like TTK Prestige and Glen have extended their credit period by 30 - 60 days.

Apart from the above, companies have also announced some special support programmes in April '20. For example:

  • For trip scheme by Havells, cash amount has been transferred directly in trade channel partners' account
  • Channel Finance Programme by Panasonic and TTK Prestige
  • In case of Gold Medal, international tour scheme offer period has been extended. Corresponding annual sales target for qualifying has been reduced by 20%
  • Online product training programme offered by companies like Legrand

Most useful programmes as perceived by the trade channel


Additional cash discount being offered by companies was found to be useful by 58% of the trade channel partners while 28% found extended credit period most useful during the lockdown period.

Around 29% of trade channel partners claimed to have made payments to companies or distributors during the month of April '20. Majority of them have utilized the additional cash discount scheme offered by companies during the lockdown.

Trade Channel's Expectations


While majority of the players in the trade channel found additional cash discounts useful, many of them also want companies to extend credit period for payment. Across categories (Fans, Building Electricals and LED Lighting), the trade channel expects companies to offer 60 - 90 days of credit. Approx. 43% of them wanted an extension in credit period in Building Electricals category while in the case of the fans business, it stood at 49%.

In case of Air Coolers, almost half of the trade channel that they won't be able to liquidate the stock post lockdown primarily because of a short sales window. As a result, 42% of them want companies to take back the current stock as the peak period is almost over now.

Opinion on Sales through E-Commerce


Only 4% of trade (from east & south) expressed interest in selling products online after the government allowed E-Commerce firms like Flipkart, Amazon to operate from April 20th. Majority of these players are likely to sell electric fans followed by kitchen appliance products.

Trade Channel's Purchase Planning for the Upcoming Month


On an overall level, trade has stated that they would make only 1/3rd of investments this year as against investments made last year.

Post lockdown, they plan to invest most in Building Electricals products followed by LED Lighting, Electric Fans and Kitchen Appliances. This could also be because the construction season is around the corner and they might have already invested in fans, particularly in North and East.

In South India, maximum investments are likely to be made by the trade channel in Building Electricals followed by LED Lighting and Fans. In West, they are likely to make investments in non-electric kitchen appliances followed by Building Electricals. In Eastern region, the trade channel is likely to invest in Building Electricals and Fans while in North, investments are likely to be made in LED Lighting, Building Electricals followed by Electric Fans.

Extended Warranty for products


Companies have extended warranty on their products by up to 3 months. Havells, Pigeon, Orient & Godrej have extended warranty by 2 months. Usha has extended warranty up to May 31 for those wherein the warranty is ending between March 20 - April 30, while Crompton has extended it till June 30. Preethi and TTK Prestige have extended their warranty on all products by 3 months.


This dipstick survey was carried out telephonically amongst 100 trade channel partners across 20 Tier-1 and Tier-2 towns in India spread overall zones.

 

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